The Sixth U.S. Circuit Court of Appeals (Kentucky’s federal appellate court) recently reaffirmed that neither Title VII of the Civil Rights Act of 1964 nor the Kentucky Civil Rights Act (KCRA) protects employees on the basis of sexual orientation. But the court left the door open for a challenge to an employer’s refusal to employ someone on the basis of her sexual orientation because it receives funding from the Commonwealth.

Facts

Alicia Pedreira, Karen Vance, and several Kentucky taxpayers sued the Kentucky Baptist Homes for Children, Inc. (KBHC), for its policy of refusing to employ gay and lesbian employees. They asserted that KBHC’s policy was discriminatory under Title VII and the KCRA. They also claimed the policy violated the Establishment Clause of the First Amendment to the U.S. Constitution (which forbids the government from acting to promote one religion over another).

Pedreira was fired from her job at KBHC when a photograph of her and her partner at a gay pride event came to her employer’s attention. Vance, a lesbian and a social worker from Louisville, said she would have applied for a position at KBHC but felt it was futile because of the home’s well-publicized policy prohibiting the employment of gays and lesbians.

The U.S. District Court for the Western District of Kentucky granted KBHC’s request for dismissal of the women’s employment discrimination claims. According to the court, sexual orientation isn’t a protected class under Title VII or the KCRA, and Pedreira and Vance failed to show they had been discriminated against because of their refusal to comply with KBHC’s religious views. The court also dismissed the First Amendment claims, finding the women lacked standing (the legal right) to assert them. Pedreira and Vance appealed to the Sixth Circuit.

Sixth Circuit’s decision

The appellate court upheld the dismissal of Pedreira and Vance’s employment discrimination claims but reversed the lower court’s decision on whether job applicants who are refused employment can sue under the First Amendment.

KBHC is funded by the Commonwealth of Kentucky as part of its participation in “the alternatives for children program,” which places children who are at risk of abuse or neglect in safe locations. Pedreira, a family specialist at one of its facilities, was terminated when her sexuality was discovered. When it fired her, KBHC indicated that she was let go because of her admittedly homosexual lifestyle, which was contrary to its “core values.” In the lawsuit, Pedreira, Vance, and the taxpayers claimed that KBHC was a “pervasively sectarian institution” that uses state and federal money to promote a religious purpose.

KBHC admitted that it had received an average of $12.5 million per year from the state during the last decade. The evidence showed that KBHC was using public funds to hire youth ministers and spread Christian teaching. The agency displayed religious pictures in its facilities, held group prayers before meals and during staff meetings, and required employees to incorporate its religious beliefs into their behavior. In a review of its facilities conducted by an outside agency, 296 of the youths served by KBHC said its religious practices were “coercive.”

Pedreira claimed that KBHC’s policies were discriminatory on the basis of religion. The Sixth Circuit upheld the dismissal of that claim because she didn’t provide any evidence of her own religious beliefs and how they differed from KBHC’s to create even a suggestion that religious differences were the reason for her discharge. However, the court clearly indicated that such a claim could be made if the issue was properly stated. According to the court, “[W]hile there may be factual situations in which an employer equates an employee’s sexuality with her religious beliefs or lack thereof, in this case Pedreira failed to state a claim upon which relief could be granted.”

The court didn’t dismiss the case in its entirety, however. It held that as taxpayers, Pedreira, Vance, and the others stated a “concrete and particularized injury” because their tax dollars were being used by the Kentucky Legislature to fund KBHC, and that meant they were funding a religious organization. Pedreira and Vance were able to demonstrate that the Commonwealth knew tax dollars were being used to finance KBHC’s religious activities.

The court found that Pedreira and the others had established a link between the state and the impermissible funding of a religious organization. In addition, in sending the First Amendment claim back to the trial court, the court found that it was relevant to consider KBHC’s employment policies in evaluating whether its activities in support of its religious preferences provided proof that it received state funds in violation of the Establishment Clause. Pedreira v. Kentucky Baptist Homes for Children, Inc.

Bottom line

This opinion confirms that the KCRA and federal law do not protect employees on the basis of sexual orientation. However, it raises a fundamental question about whether a religion-based agency receiving state funds can be sued when it enforces its policy not to employ someone whose lifestyle is contrary to its core values. Stay tuned for further developments.

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If you have any questions or need help, please contact any member of the Bingham Greenebaum Doll LLP Labor and Employment Practice Group. Find us online at www.bgdlegal.com.

Copyright 2009 M. Lee Smith Publishers LLC KENTUCKY EMPLOYMENT LAW LETTER does not attempt to offer solutions to individual problems but rather to provide information about current developments in Kentucky employment law. Questions about individual problems should be addressed to the employment law attorney of your choice.